Canada's Migration Policy Shift Drives Down Housing Costs Amid Ongoing Affordability Struggles
In a bold move to address soaring housing costs, Canada implemented sweeping reductions in migration levels, targeting both permanent immigrants and temporary residents like foreign students. This policy shift, initiated under former Prime Minister Justin Trudeau in late 2024, has led to a notable decline in rental prices and home values, particularly in major urban centers. However, housing researchers emphasize that these changes have not resolved the deep-seated affordability crisis plaguing the Canadian property market.
Impact on Rental and Property Markets
According to data from Rentals.ca, average asking rents across Canada have fallen for 17 consecutive months on a year-over-year basis. Carolyn Whitzman, a housing researcher and adjunct professor at the University of Toronto, reports that rents have dropped by 3% to 5% over the past two years. This decrease follows a period of significant post-pandemic increases, driven by a surge in overseas migration that peaked in 2023 with nearly 1.2 million new residents.
The reduction in migration has had a more pronounced effect on apartment values in cities like Toronto and Vancouver, where prices have plummeted by as much as 35% due to diminished demand from international students. Steve Pomeroy, a housing expert at McMaster University, explains that the temporary migrant influx overwhelmed the rental market, which comprises 4.8 million units nationwide. He notes, "The building industry struggled to meet the sudden demand shock, requiring 490,000 new homes annually post-2021, triple the historical average."
Broader Economic and Social Consequences
While the migration cuts have moderated housing costs, they have also triggered unintended repercussions. Universities across Canada are facing financial strain as foreign student fee revenue collapses, leading to program closures. Additionally, industries reliant on temporary workers, such as healthcare and agriculture, are experiencing labour shortages. Nathan Janzen, assistant chief economist at the Royal Bank of Canada, describes the migration swing as "unprecedented," highlighting that immigrants bring youth and skills to an ageing population, mitigating long-term economic gaps.
The policy adjustment has shifted Canada's economic landscape, with per capita GDP showing gains in 2025 despite overall population shrinkage expected in 2026—the first decline since the 1940s. Janzen adds, "What really matters is how each individual household or worker is doing," pointing to improved household economics despite slower GDP growth.
Lessons for Australia and Future Outlook
Carolyn Whitzman, who has lived in Australia, draws parallels between the two countries, noting that both face ageing populations and housing shortages. She stresses, "Immigration itself isn't a problem; planning that doesn't take immigration into account is a problem." The Canadian experience underscores the need for balanced policies that integrate migration with housing supply and public services.
Despite the recent price declines, affordability remains a critical issue. Whitzman observes that no Canadian city offers affordable two-bedroom apartments for minimum wage workers, and one-bedroom units are similarly out of reach. The average asking price for a studio apartment in Toronto or Vancouver hovers around C$700,000, accessible only to high-income earners or those with inherited wealth.
In summary, Canada's migration cuts have provided temporary relief in housing costs but fall short of solving the affordability crisis. Experts advocate for evidence-based planning to ensure sustainable growth and housing accessibility, offering valuable insights for nations like Australia grappling with similar challenges.
